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HomeMy WebLinkAbout1990-12-20 Minutes43 t; MINUTES OF A RETREAT MEETING OF:.THE CITY BOARD OF DIRECTORS A Retreat Meeting of the Fayetteville City Board of Directors was held on Thursday, December 20, 1990 at 1:30 p:m. in Room 326 of the City Administration Building at i113 West Mountain Street, Fayetteville, Arkansas. CALL TO ORDER The meeting was called to order by the Mayor. He pointed out that no official Board action can be taken at the retreat meeting. BUDGET City Manes..: Scott Linebaugh- reviewed the 1990-91 budget. He impressed upon everyone that staff has worked very hard to cut out everything but essential items and projects. He also stated that revenues were not keeping up with demands in cost of service. He pointed out that this is not only in Fayetteville but nationwide. The total budget is a decrease of $13.3 million over 1990. The best gauge of this fact is that reserve funds have been utilized for total operating funds by less than $500,000 than in 1990. Regarding the General Fund, the number of staff members has been cut by not filling positions, lowering positions grades, etc., for a total of $162,000, and extreme scrutiny was used regarding travel, training, etc., which was not absolutely necessary for a total savings of $285,000. Reductions in basic services are going to have to be made after 1993 in order to survive as the present figures stand. Vorsanger stated that a deficit of $370,667 was proposed by Linebaugh. Next year that will be a $617,000 deficit, and the year after that $881,000. A question that Vorsanger addressed to the Board was, "Do we really want a budget deficit?" and even if the expenses remain the same year after year, we would still have a deficit. Linebaugh was asked to name the one or two revenue sources that the Board has any control over. Linebaugh presented the Board with a slide presentation of possible revenue sources that could be increased or initiated: 1) - Franchise Fees -- Franchise fees are in the general funds and paid through utility bills. These are charges for the utility companies to use the city's right-of-ways. 2) Occupation Tax -- Years ago the city had an occupation tax that was based on a fixed amount. This was much more work than it was worth. It was suggested that 1% of gross revenues could generate up to $6,000,000 additional revenue. 4;1 December 20, 1990 3) Automobile Tax -- This is a certain amount per vehicle. This would generate approximately $97,000. The property tax has been discussed for years, and it has been the consensus of the Board that this should not be increased. The maximum we could get out of this is $700,000. 4) Sales Tax -- Lastly, is an additional 1/2 cent city sales tax, which would bring in $2,500,000. The property tax could not be re -voted until November of 1991, which means it would not take effect until the year after that. The impact of the tax would be felt in 1992. Shell Spivey inquired if any of the currently assessing an occupation tax. this and the consensus of the Board was labor intensive services. surrounding 'ties were There was ,:ussion on this was limited to a few Linebaugh stated that there are no increases of any taxes in the Staff recommended budget. He pointed out that something is going to have to be done differently at the end of 1993 according to economic projections to generate enough revenues to meet expenses. Linebaugh discussed that all in all, 4.5 positions have been cut, but funding -wise, 8.5 positions have been cut. The financial analyst will be covered by a grant. Other expenses that will be cut will cover the cost of a staff attorney. There have been department reductions made that will not hinder City services. Judy Cohea, Budget Officer, reviewed the fund summaries and graphs that accompanied this subject to give an idea of the overall budget that is contained in the Summary Book. She stated the graphs were to show the city's budget philosophy. The street fund will be a maintenance fund only. Any capital project, major overlay, or new street would have to be funded from sales tax. Street fund revenues are basically fairly flat, so there is not much growth. She also discussed the available cash balances in the proprietary funds, which include the water and sewer fund in the amount of $1.5 million, which is the acceptable level. The Solid Waste Fund shows a balance of $320,000, and in 1991 a rate study will be done along with a proposal for a solid waste rate increase. The cash flow continues to be positive in the airport fund and is supporting its capital projects for this year. The major operating funds are the General Fund, Street Fund, Water and Sewer Fund, Solid Waste Fund, and the Airport Fund. In 1991 there are revenues of $27,000,000 and expenses of $32,000,000. The differences are the school proposal of $1.4 million, the landfill 433' December 20, 19901 ,cost is about $500,000 more, the motor pool charges in the solid waste, because of the new equipment, is $200,000. The General Fund includes the capital expenditure for the public access TV building, and that was collected in 1990 to be expended in 1991. Also, the waste water treatment plant in the water and sewer fund was constructed through a capital improvements bond; therefore, the depreciation is not offset by the revenues. Capital expenditures for 1988 and 1989 were considered normal capital improvements for water lines and sewer lines and streets. The one -cep" county sales tax benefits the city of Fayetteville by 39%. In 1% the city sales tax was invoked, and from 1985 to 1988 it was dedscuced to the waste -water treatment plant bond issue. In 1989 through 1991, it was re -dedicated to capital improvements. The property tax is flat because it is still at 2.1 mills. The big jump in the franchise tax is due to the financial arrangement made in the water and sewer fund to get the money to the school system. The franchise tax was increased to the water and sewer fund, and that is why there was such a jump. The sales tax is going to pay for the capital projects in water and sewer. Water and sewer is being charged, a franchise tax, and that money is transferred over to the - General Fund and then General Fund transfers it for the school additions that will be made. The User Fee by Service shows the solid waste and sanitation fees and the sewer service charge. The solid waste fees have not been increased since 1982, so any increase there is due to growth. The water and sewer fees were increased in 1990. In 1991, water rates will go up around 11%, and this is a direct result of Beaver Water District which has scheduled another large increase for Fayetteville in 1991. This is the third year in a row that there has been an increase. The sewer rates will go up around 5% in 1991. There was discussion about the fact that Springdale, Fayetteville, and Rogers have the highest cost of water in the state. Fayetteville is very high on the sewer cost because of the new plant. The operating costs went up significantly between the old plant and the new plant, but now the City has much better quality effluent. MAJOR OPERATING FUNDS GENERAL FUND The General Fund provides services for administration, city attorney, police, fire, finance, building maintenance, parks, library, traffic, personnel, the business office, municipal court, animal services, transfers, CEMS contribution, City Hospital, 434 December 20, 1990 school district capital transfer, Arts Center debt service and the A&P Commission. Under Administrative services there is a figure of $4.4 million in miscellaneous programs, and that is where a variety of different things that don't fit neatly in a department or is an outside agency or organization that is funded by the City. MISCELLANEOUS BUDGET This is the budget where escrow is paid for the school construction project. That is where transfers are made for the Advertising and Promotion Commission, fund the CEMS contribution, and make the transfers to the Arts Center, the National Cemetery contribution, etc. The Miscellaneous budget is $3.1 million. STREET FUND The Street Fund provides street maintenance, drainage maintenance, a right-of-way maintenance program, and street light expense (utility expenses in the street fund). The inter -governmental revenues is the state turn -back that is received. The city's portion of the county road tax, property taxes, and unreserved fund balance has been used to make up the difference this year. WATER AND SEWER FUND This fund provides for the cost of water from Beaver Water District, meter reading, transmission of water, collection of waste water, treatment of waste water, debt service for outstanding water and sewer bonds, and depreciation of plant property and equipment. The main revenue sources are from water sales and sewer service charges plus interest income on fund balance. SOLID WASTE FUND This fund has the commercial pick-up, and this year the landfill cost is calculated in the commercial pick-up, and residential pick- up revenues. The recycling budget also includes the composting site. The revenues there are from sanitation fees. AIRPORT FUND The revenue sources here are from parking fees, rents and leases from rental cars, displays, the airline fees, interest on investments and the fund balance which has been collected. The depreciation reflects depreciation on city purchased or constructed items as well as items that are purchased and constructed through grant revenues. 1 December 20, 1990.1 GENERAL ADMINISTRATION DEPARTMENT The Generalbudget has been increased by adding the following staff: an assistant economic development coordinator, a staff attorney, a Hot Check Coordinator, and a warrant officer. Cuts in staff have been made in other areas. • In regard to the Hot Check Program, this budget includes a $30,000 ,shortfall the first year. That is mostly attributed to the fact that it takes around 10 months to get a warrant officer fully trained and nn staff. A warrant officer would be brought in around .the first o .:.e year, and then bring in the coordinator in August. ,They will ;k..•: about six_weeks to get the feel of the office, and then start the Hot Check Program. It would be around the end of September before the Hot Check collection would be started. The warrant officer would be paid the same as a patrol officer. There was discussion about the public being educated regarding the seriousness of this problem of writing hot checks. Vorsanger expressed his concern about a resolution or ordinance being imposed regarding the enforcement of the Hot Check Program. The general :zonsensus was that it would have to be brought back to the Board for a vote and final approval. CITY ATTORNEY There was discussion regarding the outside attorneys that have worked for the City and the exorbitant fees that have been charged. There was a desire to try to keep all legal matters in-house for the current city attorney to handle. Rose explained that the extra help that has currently been added to the budget would most likely be someone directly out of law school to help hits iith his work load. ECONOMIC DEVELOPMENT Cohea explained that the Advertising & Promotion Commission has committed $30,000 to Economic Development, and the balance of the funding is divided between the General Fund, the Water and Sewer Fund, the Airport Fund, Street Fund, and the Solid Waste Fund. Vorsanger explained to the Board that there was a lot of discussion approximately a year ago about economic development and whether to continue the program. During that first year the question came up and a lot of concern was expressed on the part of the Board that there was an industrial park that was not owned by the City, there were prospects coming in, and there was a lot of questions whether the Chamber was in a position to speak for the City. There were .some prospects approaching the Chamber with questions that could only be answered by the Board. At that time the Chamber was in the 436 December 20, 1990 process of changing executive directors. The Board pushed hard for sound economic development. There was discussion about the fact that if an industry was interested in coming to Fayetteville via the Chamber, the Chamber, in turn, would have to find out their environmental record, any kind of criminal charges pending against them, what they make, how many people they employ, the social and cultural impact, etc. Then they would submit the proposal to the Board of Directors, and the Board would make the final decision about a corporation's compatibility with the City. Coody stated that he felt there could be alternatives in order to reduce the $211,000 budget. Vorsanger stated that there was a need for stro-: economic development activities and capabilities within the C. , and they are needed in the Chamber of Commerce, too. Both hade the same goals, but serve two different roles. There are things only the City can do to help bring in an industry that the Chamber cannot commit to. The main thing is to make sure both are going in the same direction and not in conflict with each other. We need to share the responsibility with the Chamber to promote and market our old and new industrial parks. Perhaps some of economic development activity could be funded through the A&P Fund. Richard Shewmaker, Economic Development Coordinator, stated that if the funding is handed over to the Chamber of Commerce there really will not be that much money saved and you will have less of a program. There was concern by Director Coody that $200,000 was too expensive and if the cost could be cut down and still dothe same amount of work for $100,000, then it wouldn't matter where the office was. Director Spivey pointed out that the Chamber President was very efficient, but there has not been an industry landed by him. He voiced his opinion that $200,000 was a drop in the bucket for a big industry who comes in. He stated that if some of these commitments had been made in the mid '70's, we wouldn't have the problems that exist now. Director Nash asked if the Staff could come back with another proposal. She expressed her desire to see the budget streamlined a little bit, and wanted to see how Staff would change it. There was a desire to obtain a consensus from the Board where they stand on this proposal. The consensus of the Board was that there would be a vote on this issue at a later date. Director Vorsanger was in agreement with the Board that the elimination of the funding for the You Can contract should be considered. He expressed concern in the $94,000 reduction in the City Hospital lease because they are struggling for money. s December 20, 19904 437 Linebaugh explained that the money paid to City Hospital is to pay a bond issue. The citizens voted when the County tax was approved, to pass a portion of that sales tax just for that bond issue. Currently, more+is.being put in than what is required to pay off the principle and interest on that bond issue. It was pointed out that they would be coming to the Board later on this year or next year, asking for a great deal of money from the city. This could be to the tune of $200,000 per year more than what is currently given to them. There was an services in steady lev. several yea bond issue. significant • attempt to more accurately contribute to the ambulance t: -arms of contribution on a per capita basis. A fairly f around $15,000 has been maintained for the last In 1990,__$60,000 in capital was pledged from the So, the increase between 1990 and 1991 is not as as it appears. Director Vorsanger proposed that items be starred that there were questions about. One such item that he has concerns about is the Northwest Arkansas Regional Planning Commission totaling $27,456. . He suggested that the Advertising & Promotion Commission pick up the Air Museum expense. • * It was pointed out that the library 1990 budget contains book purchases of $60,000, and they hadn't planned on completing their capitalization of books in 1990. They have spent over $30,000 currently on books. They have agreed to capitalize books in 1990 and bill the city the capital funds of $30,000 for books. There was discussion about the Regional Planning Commission concerning their effectiveness in the community and if their services were needed at this time. Director Green stated the help they provide Fayetteville is not as visible as .it used to be. Since Fayetteville is their major • funding, it should be realized that it could be "the kiss of death" for them if Fayetteville were to pull out. It needs to be decided if Fayetteville really needs a Regional Planning Commission. The overall benefit to Fayetteville is somewhat positive especially in light -of the fact of the regional airport coming in. The data that the Planning Commission accumulates is a service that is beneficial to the city. They are currently being paid $27,500 per year. It was suggested that they come to a meeting and let them justify their program to the Board. FUNDING OF CITY ADVERTISING AND PROMOTION Judy Cohea stated a commission was formed, and there was an HMR tax levy, then the commission pledged the entire tax‘to the retirement of the Continuing Education Center (CEC) bonds. The CEC bonds were issued based on the fact that there would be revenue generated from 'l i ti December 20, 1990 the entire HMR tax, some parking lot fees, the lease that was received from the University, and also a turn -back from the State for Tourism in the Continuing Education Center. Once those revenue sources are received in the CEC Bond Fund, the determination will be made on how much is required for debt service. Anything above debt service, is then transferred back to the General Fund for any lawful purpose. Currently, the Board of Directors in the past and present budgets, have dedicated excess CEC for two purposes. 1) To fund the Advertising & Promotion Commission and 2) to fund the Arts Center debt service. The transfer of monies comes out of excess CEC to the A&P Commission. The money that is going to the General Fund from the A&P in the amount of $336,000 is not part of the undesignated fund balance that was presented earlier. That money comes from a designated section. There was discussion on the Advertising & Promotion fur.'l regarding the fact that the Advertising & Promotion Commission is esponsible for their own budget and setting expenditures. The _lard has no authority regarding these types of decisions for the Advertising & Promotion Commission. Secondly, there are only certain things that the Advertising and Promotion HMR tax can be used for, and that is primarily for advertising Fayetteville. Cosmetic environmental improvements cannot be made with this money. MISCELLANEOUS Green expressed his concern about adopting the new budget with a deficit. Vorsanger stated that of the three areas that are proposed of being reduced, (those being the Library, Regional Planning, and Air Museum) he would like to see that the Air Museum funding stays intact because of its resourcefulness to the city. Coody expressed his concern about the state of the new proposed budget. He also expressed his desire to settle the incinerator issue out of court if at all possible. FUTURE MEETINGS The Board agreed to hold its next budget session retreat on January 4, 1991. An agenda session was scheduled for December 26, 1990. A City Manager Evaluation on December 28, 1990. ADJOURNMENT The meeting was adjourned at 4:49 p.m.